Tech Stocks Climb on Bargain-Hunting, Positive Outlooks

Technology stocks climbed near a 2-month high as investors bought beaten-down semiconductor companies despite a revenue warning from Broadcom, but rising oil prices renewed worries about corporate profits, limiting overall gains.

The Dow Jones industrial average (search) ended down 2.29 points, or 0.02 percent, at 10,310.78, according to the latest available figures. The Standard & Poor's 500 Index (search) advanced 1.27 points, or 0.11 percent, at 1,125.19. The tech-heavy Nasdaq Composite Index (search) closed up 13.20 points, or 0.70 percent, at 1,907.51.

While Broadcom (BRCM), which makes chips for television set-top boxes and other electronics, said high inventories resulted in delayed shipments, investors were encouraged as it said future quarters looked brighter.

Todd Clark, head of listed trading at Wells Fargo Securities, said the rise in tech stocks could be explained in part by short sellers covering their positions by buying stock outright.

"You have a lot of shorts out on technology, so I think a lot of the action is people either covering shorts or it's also a product of people unwinding positions," said Clark.

"I think the Dow and certainly the S&P are being held in check by the move higher in crude. We have a diverging market here."

The Philadelphia Stock Exchange semiconductor index (search) rose 2.47 percent.

Crude oil price rose as Hurricane Ivan (search) churned toward the Gulf of Mexico. Officials said 100,000 barrels per day of oil production and 266 million cubic feet of natural gas output had shut in the Gulf.

Crude futures ended more than $1 higher. October crude on the New York Mercantile Exchange (search) settled $1.06 higher, or 2.5 percent, at $43.87 a barrel.

ChevronTexaco Corp. (CVX) and Exxon Mobil Corp. (XOM) gained with the rise in the price of oil.

Broadcom said it now expects revenues for the quarter to come in flat or just slightly higher than a year ago. The company said customers of its set-top box chips have asked for shipping delays due to excess inventory, but added that it still expects growth in future quarters.

Broadcom shares rose $2.60, or 9 percent, to $30.30 after the maker of communications chips said its inventory glut would have a short-lived effect on its revenue. Intel (INTC), the world's No. 1 chip maker, rose 23 cents, or 1.1 percent, to $20.80 and helped to lift both the S&P 500 and Nasdaq indexes.

Shares of US Airways Group Inc. (UAIR) tumbled 44 cents, or 30 percent, to $1.02 after it filed for bankruptcy protection, a move that was widely expected. The nation's seventh-largest airline will continue operations as it attempts to sort out its finances.

CKE Restaurants Inc. (CKR), which runs the Carl's Jr. and Hardee's fast-food chains, saw its shares fall after posting a second-quarter net loss. Shares were off $1.19, or 9 percent, at $11.19.

The bidding war for Hollywood's last independent movie studio, Metro Goldwyn Mayer Inc., heated up as Sony Corp (SNE). raised its bid in order to beat out rival Time Warner Inc., according to media reports. MGM was up 44 cents at $11.55, while Sony gained 53 cents to $35.82 and Time Warner slipped 6 cents to $16.45.

Campbell Soup Co. (CPB) saw fourth-quarter profits fall due to higher promotional costs and lower sales. The soup company missed Wall Street estimates by a penny. Campbell dropped 70 cents to $25.50.

Trading volume was relatively light on Wall Street as many investors awaited better economic data later in the week, including new readings on retail sales and the consumer price index on Tuesday. The Federal Reserve (search) 's Sept. 21 meeting on interest rates, at which the Fed is likely to raise the benchmark rate a quarter percentage point to 1.75 percent, also kept investors on the sidelines.

The Russell 2000 index of smaller companies was up 3.19, or 0.6 percent, at 573.10.

Overseas, Japan's Nikkei stock average jumped 1.5 percent. In Europe, Britain's FTSE 100 was up 0.3 percent, France's CAC-40 gained 1.3 percent and Germany's DAX index climbed 1.7 percent.

Reuters and the Associated Press contributed to this report.